Dear Shareholders,

Your Directors have pleasure in presenting the 13th Annual Report together with the audited statement of accounts of the Company for the financial year ended March 31, 2012.

BUSINESS UPDATE

• Return on Equity (RoE) has grown to 20.35%. The Company intends to further improve RoE by maintaining a steady business growth.

• 350% final dividend of Rs. 7/- per share of face value of Rs 2/- has been proposed. With this, the total dividend for FY 2011-12 (including interim dividend of Rs. 6/- already paid) is Rs. 13/- per share of face value of Rs 2/- amounting to 650%, total outflow of Rs. 470.7 Cr (inclusive of Dividend Distribution Tax).

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Asset Growth

• Assets have grown at a quarterly average of approx Rs. 2,000 Cr over the course of the last 10 quarters.

• Net Interest Income continues to steadily increase on the back of steady asset growth from long-duration mortgages.

Asset Composition

• Home loans, which forms the majority of incremental disbursals, are disbursed at an average ticket size of Rs. 23 lacs; average LTV of 64% at origination, for an average term of about 14 years.

• Long-term, low-risk mortgage loans' contribution remains steady at 71% of the total assets.

HOME LOANS: STREAMLINED LOAN FULFILMENT

• In FY 2012, the company's document management system received the ISO certification (ISO 9001:2008).

• The company continues to grow its branch network and now has 180 branches spread across the country.

• The company has a well-trained, in-house Direct Sales' Team of over 1,400 people to promptly attend to prospective customers.

IMPROVING LIABILITY PROFILE

• In keeping with its stated strategy, the company continues to maintain healthy levels of liquidity with cash and bank balances and current investments adding up to Rs. 5,975.62 Cr at the end of FY 11-12

• Funds raised through bonds have grown to Rs. 6,167 Cr in Mar 2012, up from Rs. 3,903 Cr in Mar 2011

• The company has further reduced its reliance on short-term money to 10% of total borrowings, well within its target limit of 15%

DIVERSIFIED BORROWING PROGRAMME

• Amongst its lenders, the company now counts 67 strong relationships: 23 PSU banks, 15 Private and Foreign banks and 29 other Mutual Funds, Provident Funds, Pension Funds and Insurance Companies.

IMPROVING COST-INCOME RATIO

• The company continues to witness improving operational efficiency, with the cost to income ratio further declining to below 19%.

• Going forward the company expects the Cost/ Income ratio to improve further.

STABLE ASSET QUALITY

• Low Gross and Net NPA levels as low-risk mortgage portfolio increases the asset base, while contributing very low incremental delinquencies.

• The total provision pool, including floating and standard asset provisions, stood at Rs.329.83 Cr as on March 31, 2012, compared to Rs.219.74 Cr on March 31, 2011.

INCOME SOURCES

• 'Interest Income' contributes significantly to the total income. Its contribution has increased on account of sustained asset book growth due to long-term mortgage loans.

• 'Fee Income' continues to be a significant income stream for the company.

• Improving recoveries from written off assets and misc income, has led to 'Other Income' maintaining its contribution to the total income.

Sale of Loans

During the year, the Company, under the assignment agreement route sold individual loans to different Banks/FIs.

As at 31st March, 2012, total loans outstanding in respect of loans sold stood at Rs.2,175.21 Crores. The Company Continue to service the loans sold under these transactions and is entitled to the residual interest on the loan sold. The residual interest on the individual loans sold is 3.85% per annum.

The residual income on the loans sold is being recognized over the life of the underlying loans and not on an upfront basis. Issues through which loans have been sold have been rated by external agencies and carry a rating indicating a high degree of safety.

Loan Book

As at March 31, 2012, the company is having the Assets under Management (AUM) of Rs 27,521.23 Crores as against Rs 19,824.86 Crores in the previous year and the loan book stood at Rs 25,346.03 Crores as against Rs 19,430.67 crores in the previous year.

Subordinated Debt

During the year, the Company raised Rs.211.30 Crores through the issue of long-term Unsecured Redeemable Non - Convertible Subordinated Debentures. The Subordinated Debt was assigned a 'AA+' rating from both, CARE and Brickworks Ratings.

As at March 31, 2012, the Company's outstanding subordinated debt stood at Rs. 211.30 crores. The debt is subordinated to present and future senior indebtedness of the Company and has been assigned the rating by CARE and Brickworks Ratings. Based on the balance term to maturity, as at March 31, 2012, Rs. 211.30 Crores of the book value of subordinated debt is considered as Tier II under the guidelines issued by the Reserve Bank of India (RBI) and National Housing Bank (NHB) for the purpose of capital adequacy computation.

Non Convertible Debentures (NCD)

During the year, the Company issued NCD amounting to Rs. 3,079.00 crores on a private placement basis. The Corporation's NCD issue have been listed on the Wholesale Debt Market segment of the NSE and have been assigned a AA+ rating from both CARE and Brickwork Ratings. As at March 31, 2012, NCD outstanding stood at Rs. 6,166.50 Crores.

Loans from Banks

During the year, the Company raised term loans amounting to Rs. 5,350.00 Crores from commercial banks. The Company further raised Rs. 75.00 crores from the banking sector as FCNR(B) loans.

The Company's long-term bank loan facilities continue to enjoy a rating of AA+, signifying high degree of safety for timely servicing of debt obligations and its short-term bank loan facilities continue to enjoy a rating of Al + signifying highest degree of safety for timely servicing of debt obligations.

Non Performing Loans

Gross non-performing loans as at March 31, 2012 amounted to Rs. 218.78 crores. This is equivalent to 0.79% of the portfolio (as against 1.03% in the previous year). This is the 8th consecutive quarter end at which the percentage of non-performing loans have been lower than the corresponding quarter in the previous year.

Regulatory Guidelines / Amendments

The Company has complied with RBI directions regarding Accounting Standards, Prudential norms for asset classification, income recognition, provisioning, capital adequacy and credit rating. During the year, National Housing Bank (NHB) has scrapped and abolished the pre-payment penalty on pre-closure of home loans, in a situation where the housing loan is on floating interest rate basis and is pre-closed through any source and where the housing loan is on fixed interest rate basis and is pre-closed through own source.

Risk Management Framework

The Company has risk management framework, which provides for the mechanism for risk assessment and mitigation. The Risk Management Committee of the Company comprising members of its senior management reviewed the risk associated with the business of the Company, its root causes, efficacy of the measures taken to mitigate the same, four times during the year. The Company also has a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to adopt changes.

Codes and Standards

The Fair Practices Code (FPC) framed by Reserve Bank of India (RBI) seeks to promote good and fair practices by setting minimum standards in dealing with customers while doing lending business. RBI during the year issued the revised guidelines on FPC. The Board reviewed and approved the suitable amendments in existing FPC and put in place a mechanism to monitor and review adherence to the modified FPC.

Marketing and Distribution

Focused marketing activities were conducted covering both Above the Line (ATL) & Below the line (BTL) campaigns such as Print Ad's. Hoardings, FM Jingles, TV Ad's (ATL) & Below the line activities covering festive specific campaign at regional level, hosting of service desk at corporate / builder's end etc. Customer awareness programs are hosted with Money Life foundation wherein conclaves being conducted to educate the end user about the Mortgage Market. Regular mailers are sent named as " Know Your Loan" to our existing customers. This letter talks about various attributes such as ROI trend, Prepayment clause, Balance transfers, Market conditions etc. To keep the customer educated all the times, bulk SMS & e-mailers are sent on real time basis.

Cross Selling and Distribution of Financial Products and Services

State of the Art Customer Care set up is helping continuous facilitation to the customers by resolving their queries and taking care of any further loan requirements. Survey calling is also helping in continuous process improvement & creating customer referral as the outcome. In the last financial year more than 20 offices got opened which has increased our presence through 180 branches spread across more than 60 cities. All our offices are located in the main commercial hubs of a city which is resulting in ease to locate the office and increasing customer walk in's at the branch.

Training and Human Resource Management

We have hired 120 management graduates in the last year & recently hiring has been done for more than 115 Chartered Accountant's & Management graduates from esteemed college located PAN India. This talent pool is creating platform for delivering better & skilled services to our esteemed customers. Trainings for more than 1400 employees were conducted in the last financial year covering various aspects such as Sales excellence, Customer Service, Team Building, Credit Risk, System and process, Train the Trainer, etc. We have a state of art facility spread over 25,000 sq.ft. at our corporate office at Parel, Mumbai, wherein the periodic trainings sessions have been organized by the Training Dept.

INDIAN MORTGAGE MARKET

Mortgages % of GDP

• Lower mortgage penetration compared to Asian peers implies huge opportunity for growth.

• Mortgage/GDP ratio is expected to improve to 12% by FY15.

HOME LOAN PORTFOLIO GROWTH

• Home loan industry to grow at 15.7% CAGR from FY12 to FY16 on a large base of more than Rs.6,00,000 Crores.

• Indian Home Loans' market is characterized by low Average LTVs of 65-70% and predominantly first-time home loan borrowers, implying significant borrower equity and end-use towards self-occupied residential property.

• The expected growth in the home loan Industry gives opportunity for the Company to sustain current growth in its mortgage business.

FACTORS DRIVING MORTGAGE DEMAND

• Tax incentives have lowered the effective interest rates of mortgages for a home loan of Rs.20 Lacs, tenor of 15 years and interest rate of 10.75%p.a, the effective rate post tax incentives is6.75%p.a.

• Increase in the disposable income in tandem with the property prices have kept the affordability at 5 times the annual income.

• Increasing urbanization and demographic evolutions will result in 40% of Indian population residing in cities by 2030, up from current rate of 31 % as per the report published by the McKinsey Global Institute

• Current urban housing shortage is 26.53 million units as per the report published by the Ministry of Housing and Urban Poverty Alleviation

DIVIDEND

In keeping with the Company's policy to reward its shareholders, the Board of Directors of the Company has recommended a final dividend of Rs. 7/- per share on the face value of Rs. 7/- per share i.e. 350%, for the financial year 2011-2012. This is in addition to the interim dividend @ Rs. 6/- per share (300%), declared on October 21, 2011. Thereby total dividend paid/recommended for the said financial year is Rs. 13/- per share. (650%), The final dividend, if approved at the ensuing Annual General Meeting, would be paid to those members whose names appear in the Company's Register of Members as on the book closure date, appearing in the notice convening the Annual General Meeting which forms a part of the Annual Report and to all those members whose names appear as beneficial owners in the records of the Depositories i.e. National Securities Depository Limited and Central Depository Services (India) Limited, as on the said date. .

SIGNIFICANT DEVELOPMENT DURING THE YEAR

Reverse Merger with Housing Finance Company

• The Board has decided to restructure the business of Indiabulls Financial Services Limited (IBFSL) by way of its reverse merger with its wholly owned subsidiary, Indiabulls Housing Finance Limited (IHFL), a Housing Finance Company (HFC) registered with NHB.

• Majority of the existing and incremental business of IBFSL relates to housing finance and all other companies with similar asset profile and business are already licensed as HFCs.

• Amalgamation with IHFL will consolidate the capital available to the merged HFC entity, enabling it to steadily grow its mortgage loans business.

• Consequent to the Scheme becoming effective, upon sanction by Hon'ble High Court of Delhi and other regulatory and stakeholder approvals, the shareholders of IBFSL will get 1 (one) equity shore of Rs. 7/- each of IHFL for every 1 (one) equity share of Rs. 7/- each held by them in IBFSL. The appointed date of the Amalgamation is April 1, 2012.

Launch of Indiabulls Mutual Fund

Indiabulls Mutual Fund, sponsored by your Company went live on 24th October, 2011 and garnered more than Rs. 1,100 crores in its first scheme called Indiabulls Liquid Fund. It has built strong AUM base of around Rs.2300 Cr in the span of 6 months, and achieved March end Average AUM ranking of 31 out of total 44 AMCs. By the end of March 2012, it had launched Liquid fund, Ultra Short Term Fund, Blue chip Equity Fund and 2 FMPs, and is planning to launch 5-6 new schemes during the financial year 2012-13.

Launch of IB Homefinder

IB Homefinder an online property search portal, presently with a showcase of over 1600 Projects, was launched by the Company in December 2011 to facilitate its customer to locate and identify property as per their requirement. It provides various property options, among which most of them are pre-approved projects of Indiabulls HFC and provide choice of houses and home finance under one roof. It also provides platform for the Developers in showcasing their Projects. IB homefinder has currently tied up with over 550 Developers across India with presence in more than 7 cities covering major metro towns - Delhi NCR, Jaipur, Mumbai, Hyderabad, Bengaluru, Pune and Chennai.

Indiabulls CSR Initiative - Drug Access Program for cancer patients in partnership with Novartis

As part of our deep commitment to social causes, Indiabulls has taken up this noble project named "Novartis Oncology Access" (NOA) in partnership with Novartis (manufacturer of drugs) & Max foundation (NGO). We as the financial partner are helping them assess actual income of patient & family & based on assessed income; recommend the drugs donation slab as per approved guidelines & SOP

NOA program:

The NOA program is a drug access program to help patients, for the treatment of Ph+ chronic myeloid leukemia (CML) in chronic phase, accelerated phase and the blast crisis, who cannot afford to pay for the entire treatment cost. This program is run by Novartis along with it's partner Physicians, who enroll patients under this program after diagnosis. The MAX Foundation, an independent NGO, assists patients throughout the program in completing formalities & procurement of medicines. The Company, as a NOA partner performs the task of local credit evaluation agency which works as an independent and unbiased body for the financial analysis and assessment of the patient and his family members' earning capacity to ascertain their affordability of the medical expenses on such critical disease, as per standard operating procedure (SOP) prescribed by Novartis based on the WHO guidelines for drug donation programs. Based on the family composite Income a suitable donation decision is given.

Contactability

Indiabulls has designated a dedicated Help-Line Number: 022 30491720 that will receive patient calls during office hours (9:00 a.m. to 6.00 p.m.) for it to handle in-bound calls in response only to queries regarding the submission of requirements for the NOA. For any medical or clinical queries, the Company refer patients to their treating physician.

EMPLOYEES STOCK OPTIONS

The disclosures required to be made in the Directors' Report in respect of the stock options granted under various employee stock option schemes i.e. (i) IBFSL-ICSL Employees Stock Option Plan -2006 (ii) IBFSL-ICSL Employees Stock Option Plan 11-2006 and (iii) Employees Stock Option Plan - 2008 in force in the Company, in terms of the format prescribed under SEBI (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure forming a part of this report.

The Company had also launched ESOP Schemes titled as "IBFSL ESOP -2010" and "IBFSL ESOP 2011". However, no option has yet been granted under these schemes.

During the current financial year, upto the date of this report, the Company has allotted an aggregate 48,846 (Forty Eight Thousand Eight Hundred and Forty Six) Equity shares of face value Rs. 7/- each under IBFSL-ICSL Employees Stock Option Plan -2006, on May 02, 2012, as a result of which the equity capital of the Company stands increased from Rs. 62,36,09,142/- divided into 31,18,04,571 Equity shares of face value Rs. 7/- each to Rs. 62,37,06,834/-divided into 31,18,53,41 7 Equity shares of face value Rs. 7/- each.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year under review.

SUBSIDIARIES

The statement pursuant to Section 212(l)(e) of the Companies Act, 1956 relating to subsidiary companies forms a part of the financial statements.

In terms of the circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs for granting general permission for not attaching certain prescribed documents including annual accounts of the Subsidiaries to the Balance Sheet of the Holding Company, as required to be attached in terms of Section 212 of the Companies Act, 1956, and accordingly as approved by the Board of Directors in its meeting held on April 27, 2012, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of the subsidiaries of the Company as of March 31, 2012 have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same. The annual accounts of the subsidiary companies are also kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned. Further, in terms of the said circular, information required to be disclosed in respect of each of the subsidiary company, has been disclosed, in the notes to accounts of the Consolidated Balance Sheet forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 and Accounting Standard AS-23, as notified by the Companies (Accounting Standard) Rules, 2006, as amended, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries and associate.

DIRECTORS

In accordance with the provisions of Section 255 and 256 of the Companies Act, 1956 and the Article 129 of the Articles of Association of the Company, Mr. Prem Prakash Mirdha, (DIN: 01352748) and Mr. Aishwarya Katoch, (DIN: 00557488) retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer themselves for re-appointment.

Brief resume of the Directors seeking reappointment, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/ chairmanships of Board Committees, as stipulated under Clause 49 of Listing Agreement with the Stock Exchanges in India, are provided in the Report on Corporate Governance forming part of the Annual Report.

LISTING WITH STOCK EXCHANGES

The equity shares of the Company continue to remain listed with the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). The listing fees payable to both the exchanges for the financial year 2012-2013 have been paid. The Global Depository Receipts issued by the Company continue to be listed on the Luxembourg Stock Exchange.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE REPORT

Pursuant to clause 49 of the Listing Agreements with the Stock Exchanges, a detailed report on Corporate Governance is included in the Annual Report. A Practicing Company Secretary's Certificate certifying the Company's compliance with the requirements of Corporate Governance stipulated under clause 49 of the Listing Agreement is attached with the Corporate Governance Report.

AUDITORS & AUDITORS' REPORT

M/s Deloitte Haskins & Sells, Chartered Accountants (Regn. No. 1 17366W), Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from the Auditors to the effect that their reappointment, if made would be in accordance with Section 224(1 B) of the Companies Act, 1956. The Board recommends their re-appointment.

The Notes to the Accounts referred to in the Auditors' Report are self - explanatory and therefore do not call for any further explanation.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956

The information required to be disclosed under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is given in the Annexure and forms a part of this Report.

In terms of the provisions of Section 21 7 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees in receipt of remuneration equal to or in excess of the limits stipulated under the said section, are required to be set out in a statement annexed to the Directors' Report. However, having regard to the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Any member who is interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 21 7 (2AA) of the Companies Act, 1956 your Directors confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures from the same;

2. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and the profit of the Company for the year ended on that date;

3. the Directors have taken proper and sufficient care for maintaining of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. the Directors have prepared the Annual Accounts of the Company on a 'going concern' basis.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year. Your Directors also wish to place on record their deep sense of appreciation for the contributions made and committed services rendered by the employees of the Company at various levels, to the growth & success of the Company.

For and on behalf of the Board of Directors

Sameer Gehlaut

Chairman

Place: New Delhi

Date: May 11, 2012